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Before the date of expiration stated on the Permit, the Farmer intends to transfer his farm to a newly organized corporation [hereinafter, "the Farm Corporation"] solely in exchange for its common stock. Immediately after the exchange, the Farmer will be in control (as defined in 26 U.S.C. §368(c)) of the Farm Corporation.

The Farm Corporation will be "engaged in agricultural production as a trade or business"; Conn. Gen. Stat. §12-412(63).

ISSUES:

Whether the Farmer Tax Exemption Permit will be null and void upon the transfer of the Farmer's farm to the Farm Corporation.

Whether, in determining its gross income from sales of agricultural products in the immediately preceding calendar year, as required by Form REG-8, the Farm Corporation may take into account the Farmer's gross income from such sales in such year.

RULING:

1. The Farm Corporation is "an entity distinct from its individual members or stockholders ...."; 18 Am. Jur. 2d Corporations §42 (1985); "existing separate and apart from the persons composing it ...." Id. at §43. "Generally, a corporation is a distinct legal entity and the stockholders are not personally liable for the acts and obligations of the corporation." Saphir v. Neustadt, 177 Conn. 191, 209, 413 A.2d 843 (1979) (citations omitted).

The Permit that was issued to the Farmer covers "[sales of tangible personal property made to [the Farmer]." It does not cover sales made to anyone other than the Farmer. The Permit will be null and void upon the transfer of the Farmer's farm to the Farm Corporation.

2. As a condition precedent to the issuance of a Permit by the Department to a farmer, Conn. Gen. Stat. §12-412(63) provides in part that "in the immediately preceding calendar year such farmer's gross income from sales of agricultural products ... shall have been not less than two thousand five hundred dollars ..." [emphasis furnished]. In completing the Form REG-8, the Farm Corporation cannot take into account the Farmer's gross income from sales of agricultural products during the immediately preceding calendar year, because "such farmer" refers to the applicant (in this instance, the Farm Corporation), and not to the Farmer (who is not the applicant because, unlike the Farm Corporation, he is no longer engaged in agricultural production as a trade or business).